What Naval thinks about Wealth and Money
Many entrepreneurs, people in business & successful people have acquired wealth in their life. Almost all of them think about money as an instrument in acquiring assets that can produce cash flow. When you acquire a certain amount of assets that can produce a steady cash flow or make you money while you sleep, you are certainly on the way to becoming wealthy in life.
That’s a typical definition of wealth and money from almost all the entrepreneurs out there.
Recently, I found one person Naval Ravikant who is quite an interesting personality on the internet. A successful investor who has invested in the early days of Uber as an angel investor back in 2012. When it comes to reading his philosophy about life, happiness and wealth, it’s different from others, which I learned from Naval Ravikant. I think everyone should follow him to understand what humans really are.
Here is Naval in his own words: Wealth
To start with, we first need to understand the Money is part of Wealth. Wealth is when a certain person possesses an enormous amount of money. Even if he retires, he is still able to afford a quality lifestyle.
Money is an instrument or tool through which we transfer wealth. When this money buys leverage which can be Labour, capital or even a code that can run 24/365, one could create wealth because it makes you the money while you sleep.
Naval says Wealth is anything that can make money work for you. It can be Factories producing goods, House which you can rent it out.
These assets can even be your money sitting in the bank, and you earn interest on it or buying stocks. Basically, anything that can generate consistent income. Society gives you money when you solve their problem. If the problem is not big enough or society can solve it by themselves, they would rather not pay you.
One of the hardest things is finding one problem that can be solved and build a scalable business or asset around that. If you pick any rich people, they build a business around solving one major problem that society sees. For instance, Jeff Bezos, one of the richest people on the earth, solves the problem of providing you one store where you can buy anything. Thus making the largest e-commerce store on the internet amazon.com.
These assets usually need to rent other people's time and efforts to focus on another important aspect to grow and scale. Thus, Leveraging the other people's time in the form of Labour, borrowing money from institutions or people in the form of capital, or even a single line of code runs every day throughout the year. Naval says these forces are another aspect that one person should learn to grow and scale the business.
This means Wealth is the broader concept, and money is a tool to acquire Wealth. One needs to acquire assets that can generate money while one sleeps.
But then what exactly is money for?
Here is Naval in his own words: Money
Money is an instrument used in a certain way that can help you acquire assets or works to generate more money (cash-flow).
Money has monetary value and is one of the most scarce resources and important tools to generate wealth.
Money is a scarce resource because we human needs money to meet basic survival food, shelter and other things. When we meet these requirements, the leftover money is considered savings. The rise of inflation and constant exposure to an advertisement that intends to buy things makes us difficult to save money. That is why money is a scarce source.
In terms of generating wealth, it is one of the most important tools of leverage. Money can when saved is called capital. One can borrow capital from individuals and institutions to make productive use of money or, in simple words making money works for you.
This means even if you don’t have the money with the right specific financial knowledge, you can actually leverage money in making more money and ultimately achieving wealth.
